What has changed–and what hasn’t
Gary Kaltbaum is an investment advisor with
over 18 years experience, and a Fox News Channel Business Contributor. Gary
is the author of
>The Investor’s Edge. Mr. Kaltbaum is also the host of the nationally
syndicated radio show “Investor’s Edge” on over 50 radio stations. If you
would like a free trial to Gary’s Daily Market Alerts
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At about 1:45 pm yesterday, I walked outside of my house to
hit some golf balls with my son. I stayed home because my whole family has
been sick for the past week. As I walked out, I was thinking how upset I was
that I did not do any shorting in the morning because I had a few nice short
set-ups that were working. I walked back into the house and saw the market
ramped up 100 points in a few minutes…not remembering or even caring that
the Fed came out with their minutes at 2 pm. Needless to say, after looking
at my computer, I was no longer upset about the shorts that I missed. That
was one serious ramp. First off, here is what the Fed said that got the
market rolling:
“Although future action would depend on the incoming
data, this characterization of the outlook for policy was seen by most members
as indicating that, given the information now in hand, the number of
additional firming steps required probably would not be large.”
That was it. That was enough to potentially change the
complexion of what I have been seeing the past few weeks. As you I know I have
been telling you about the recent deterioration in many of the market’s
internals. This caused the market to act soft coming into the New Year. After
yesterday’s powerful action, it is time to wipe the slate clean and see what
has changed and what hasn’t.
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The most important occurrence from yesterday is that the market
put a big line in the sand…and right where it needed to. The S&P held right
near its 50-day average. The DOW held the 50-day and the support at 10,700.
The NASDAQ held the 50-day as well as the 2186 support…almost to the penny.
The SOX held near term support right at 475. Just as I told you in October
that I had no clue how much upside would come out of the follow through…just
like I have told you recently I had no clue how deep the correction would
be…I am once again telling you I have no clue about what comes of
this…just that support has held in about as strong a fashion as can be. What
we have to watch for now is whether the major indices can now break ABOVE
recent resistance. I will be watching S&P 1276…DOW 10959Â and the NASDAQ
2278.
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Before I get into a couple of sectors, let me be clear about
something: Give everything weight. Give last week’s action weight and give
yesterday’s action the same weight. I am already getting emails telling me the
move yesterday does not count because it is just new money coming into the
market. Go tell the shorts it did not count.Â
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OIL STOCKS and OIL PRICES are now following my script to a tee.
Many OIL STOCKS popped right off of their moving averages…and on volume. You
may continue to overweight this area. Please review the quiet pullback into
support that OILS did over the past couple of weeks. That was a powerhouse
move yesterday.
 FINANCIALS were starting to roll over over the past couple of
weeks. They simply held support and rifled up on the news also.
FINANCIALS are
always going to be an important cog in the wheel. Take a gander how the RKH
held the 50-day average to the penny on the recent pullback and jumped right
off of it yesterday.
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After scanning the market, I am cleaning the slate. When I see
things pull back over a 2-week period only to watch the 2-week pullback fully
erased in 1 hour, it tells you there is some power in the move. If this is for
real, we will get the breakouts mentioned. As usual, we will take it one day
at a time. For now, the market made a nice kick save and looks to be back on
offense for the near-term. Don’t ask me what the definition of near-term is
right now. Â Of course, I have both eyes wide open for changes. More fun to
come.
Gary Kaltbaum